Former IRS chief warns DOGE cuts will weaken tax agency for years
This digest was compiled by AI from multiple sources — links to the originals are below.
Former acting IRS Commissioner Douglas O’Donnell warned that DOGE’s cuts to the tax agency’s workforce will undermine its ability to function for years. The IRS processed 140.2 million individual returns and issued 90.4 million refunds in the 2026 season, slightly down from the prior year. The agency says it expects to end 2026 with 74,000 employees, about the same as at the end of 2025.
Key Facts
- DOGE cut more than a quarter of the IRS’s 100,000-person workforce.
- The IRS processed 140.2 million individual returns and issued 90.4 million refunds in the 2026 season.
- The IRS expects to end 2026 with 74,000 employees, about the same as at the end of 2025.
- Paper tax returns make up just 6% of all returns but 72% of processing costs, according to a February report from the Treasury Inspector General for Tax Administration.
- The IRS plans to reduce the expense of paper processes from $450 million to less than $20 million by 2029.
Workforce Cuts
DOGE slashed more than a quarter of the IRS’s 100,000-person workforce. Former acting Commissioner Douglas O’Donnell said the cuts will more likely be felt years down the line and made worse by an ever-shrinking agency budget. O’Donnell told Fortune he has been very concerned with the agency’s ability to carry out its mission, whether at the services level or enforcement level, and to function as a federal government agency going forward. The IRS said its headcount should be relatively stable, expecting to end 2026 with 74,000 employees, about the same as the end-of-2025 staff level.
Filing Season Results
The IRS received 140.2 million individual returns and issued more than 90.4 million refunds, slightly down from the year before. An agency spokesperson told Fortune the IRS delivered a historic, successful 2026 filing season, efficiently processing returns and issuing average refunds that were 11 percent higher than last year. The spokesperson said IRS Chief Executive Officer Frank Bisignano remains committed to maintaining the right workforce to deliver world-class service.
Modernization Challenges
O’Donnell said the IRS’s problems did not begin with DOGE or the Trump administration, noting the agency had lagged behind other countries for years on modernization. The IRS has tried to go paperless for nearly four decades, and paper tax returns make up just 6% of all returns but 72% of processing costs, according to a February report from the Treasury Inspector General for Tax Administration. The IRS plans to reduce the expense of paper processes from $450 million to less than $20 million by 2029, though previous plans often sputtered. The 2022 Inflation Reduction Act included an $80 billion infusion and a strategic plan to transform the IRS into a modern tax administration.
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Former IRS chief warns DOGE cuts will weaken tax agency for years
